OMAN OIL MARKETING COMPANY SAOG NOTES …...OMAN OIL MARKETING COMPANY SAOG NOTES TO THE FINANCIAL...

OMAN OIL MARKETING COMPANY SAOGNOTES TO THE FINANCIAL STATEMENTSAs at 31 March 2018

1 LEGAL STATUS AND PRINCIPAL ACTIVITIES

Shareholding

percentage

Shareholding

percentage

Subsidiary companies 2017 2016

Oman Oil Marketing Company LLC 100% - KSA Marketing and

distribution of

petroleum

products.

Alhalin International LLC 100% - Oman Retail

convenience

stores and

related opertions

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

2.2.1 Standards, amendments and interpretation effective in 2017

Oman Oil Marketing Company SAOG ("the Company" or "Parent Company") is registered in the Sultanate of Oman

as a public joint stock company and is primarily engaged in the marketing and distribution of petroleum products.

The Company has its primary listing on the Muscat Securities Market (MSM), Sultanate of Oman.

The accounts of the Company are consolidated in the financial statements of Oman Oil Company SAOC (the

ultimate parent company), a closed joint stock company registered in the Sultanate of Oman. The Company has

entered into a ‘Trademark License Agreement’ with the parent company dated 22 September 2003, for the right to

use the trademark ‘Oman Oil’, in exchange for an annual fee of 0.09% of all fuel sales.

These consolidated financial statements comprise the Parent company and its subsidiaries (together referred to as

the Group), the details of which are set out below. The separate financial statements represent the financial

statements of the Parent company on a standalone basis. The consolidated and separate financial statements are

collectively referred to as ‘the financial statements’. During the year the 2017, the Company has established two

subsidiaries, which has been consolidated for the year ended 31 December 2017. The comparitive figures of the

group as of and for the period ended 31 Mar 2017 are same as parent.

Country of

incorporation

Principal

activities

The principal accounting policies are summarised below. These policies have been consistently applied to all the

years presented, unless otherwise stated.

(a) The financial statements have been prepared in accordance with International Financial Reporting Standards

(IFRSs) as issued by International Accounting Standards Board (IASB), the requirements of the Commercial

Companies Law of 1974, as amended and disclosure requirements of the Capital Market Authority (CMA) of the

Sultanate of Oman.

(b) The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting

estimates. In the process of applying the Group's accounting policies, management has used its judgments and

made estimates in determining the amounts recognised in the financial statements. The areas involving a higher

degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial

statements as disclosed in note 3.

For the year ended 31 December 2017, the Group has adopted all of the following new and revised standards and

interpretations issued by the International Accounting Standards Board (IASB) and the International Financial

Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for periods

beginning on 1 January 2017.


2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (CONTINUED)

2.2.1 Standards, amendments and interpretation effective in 2017 (continued)

• Transfers of Investment Property — Amendments to IAS 40

• Annual Improvements 2014-2016 Cycle (issued in December 2016)

- IFRS 1 First-time Adoption of International Financial Reporting Standards - Deletion of short-term

- IAS 28 Investments in Associates and Joint Ventures - Clarification that measuring

investees at fair value through profit or loss is an investment-by-investment choice

- IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration

- IFRIC Interpretation 23 Uncertainty over Income Tax Treatment exemptions for first-time adopters

Annual Improvements Cycle - 2014-2016

Amendments to IFRS 12 Disclosure of Interests in Other Entities: Clarification of the scope of disclosure

requirements in IFRS 12

The adoption of these standards and interpretations has not resulted in any major changes to the Group’s

accounting policies and has not affected the amounts reported for the current and prior periods.

2.2.2New standards, amendments and interpretations to existing standards that are not yet effective and

have not been early adopted by the Group:

The following new standards and amendments have been issued by the International Accounting Standards Board

(IASB) which may impact the financial statements of the Group but are not yet mandatory for the year ended 31

December 2017:

Amendments to IAS 7 Statement of Cash Flows: Disclosure Initiative

Amendments to IAS 12 Income Taxes: Recognition of Deferred Tax Assets for Unrealised Losses

Other IASB Standards and Interpretations that have been issued but are not yet mandatory, and have not been

early adopted by the Group, are not expected to have a material impact on the Group's financial statements

respectively.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 was issued in May 2014, and amended in April 2016, and establishes a five-step model to account for

revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the

consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either a full

retrospective application or a modified retrospective application is required for annual periods beginning on or after

1 January 2018. Early adoption is permitted. The Group plans to adopt the new standard on the required effective

date using the modified retrospective approach.

The Group has performed an assessment and concluded that the impact is not material as in majority of the

Group's contracts with customers, sale of good is generally expected to be the only performance obligation and

accordingly, adoption of IFRS 15 is not expected to have a significant impact on the Group's revenue and profit or

loss. The Group expects the revenue recognition to occur at a point in time when control of the asset is transferred

to the customer, generally on delivery of the goods.



2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (CONTINUED)

IFRS 16 Leases

The IASB issued IFRS 16 Leases (IFRS 16), which requires lessees to recognise assets and liabilities for most

leases. The standard includes two recognition exemptions for lessees – leases of ’low-value’ assets (e.g., personal

computers) and short-term leases (i.e., leases with a lease term of 12 months or less).

For lessors, there is little change to the existing accounting in IAS 17 Leases. Group will perform a detailed

assessment in the future to determine the extent. The new standard will be effective for annual periods beginning

on or after 1 January 2019. Early application is permitted, provided the new revenue standard, IFRS 15 Revenue

from Contracts with Customers, has been applied, or is applied at the same date as IFRS 16. A lessee can choose

to apply the standard using either a full retrospective or a modified retrospective approach. The standard’s transition

provisions permit certain reliefs.

IFRS 16 also requires lessees and lessors to make more extensive disclosures than under IAS 17.

In 2018, the Group will continue to assess the potential effect of IFRS 16 on its financial statements.

IFRS 9 Financial Instruments

2.2.2New standards, amendments and interpretations to existing standards that are not yet effective and

have not been early adopted by the Group (continued)

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments that replaces IAS 39 Financial

Instruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 brings together all three

aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge

accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application

permitted. Except for hedge accounting, retrospective application is required but providing comparative information

is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited

exceptions.

The Group plans to adopt the new standard on the required effective date and will not restate comparative

information. During 2017, the Group has performed an impact assessment of all three aspects of IFRS 9. This

assessment is based on currently available information and may be subject to changes arising from further

reasonable and supportable information being made available to the Group in 2018 when the Group will adopt IFRS

9. Overall, the Group does not expect significant impact on its statement of financial position and equity.



2.3 BASIS OF CONSOLIDATION

Subsidiaries

-

-

-

-

- Rights arising from other contractual arrangements.

-

- derecognises the assets (including goodwill) and liabilities of the subsidiary

- derecognises the carrying amount of any non-controlling interests

- derecognises the cumulative translation differences recorded in equity

- recognises the fair value of the consideration received

- recognises the fair value of any investment retained

- recognises any surplus or deficit in profit or loss

-

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all

relevant facts and circumstances in assessing whether it has power over an investee, including:

The contractual arrangement with the other vote holders of the investee.

The Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are

changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group

obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities,

income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of

comprehensive income from the date the Group gains control until the date the Group ceases to control the

subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the equity holders of the Parent

of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit

balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their

accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity,

income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on

consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity

transaction. If the Group loses control over a subsidiary, it:

The financial statements comprise those of the Parent company and each of its subsidiaries as at 31 December

each year. Subsidiaries are all entities (including special purpose entities) over which the Group exercises control.

Control is achieved when the Parent company:

Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of

the investee)Exposure, or rights, to variable returns from its involvement with the investee, and

The ability to use its power over the investee to affect its returns

reclassifies the Parent’s share of components previously recognised in other comprehensive income to

profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed

of the related assets or liabilities.

The Parent Company accounts for its investment in subsidiaries based on the equity method for the purpose of its

separate financial statements.


2.4 PROPERTY, PLANT AND EQUIPMENT

Years

Buildings 10 to 20

Plant and equipment 5 to 25

Vehicle, furniture and computers 4 to 8

2.5 INVESTMENT IN ASSOCIATES AND JOINT VENTURES

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting

period. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down

immediately to its recoverable amount.

Gains and losses on disposals of property, plant and equipment are determined by comparing the proceeds with

the carrying amounts and are taken into account in determining operating profit.

An associate is an entity over which the Group has significant influence. Significant influence is the power to

participate in the financial and operating policy decisions of the investee, but is not control or joint control over those

policies.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have

rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an

arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the

parties sharing control. The considerations made in determining significant influence or joint control are similar to

those necessary to determine control over subsidiaries.

The Group's investments in its associate and joint venture are accounted for using the equity method.

Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The

carrying amount of the investment is adjusted to recognise changes in the Group's share of net assets of the

associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is included in

the carrying amount of the investment and is not tested for impairment separately.

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Where an

item of property, plant and equipment comprises major components having different useful lives, they are

accounted as separate items of property, plant and equipment.

Expenditure incurred to replace a component of an item of property, plant and equipment that is accounted for

separately, including major inspection and overhaul expenditure, is capitalised and amortised. Subsequent

expenditure is capitalised only when it increases the future economic benefits embodied in the item of property,

plant and equipment and can be measured reliably. All other expenditure is recognised in the statement of

comprehensive income as an expense when incurred.

The cost of the property, plant and equipment is written down to residual value in equal instalments over the

estimated useful lives of the assets. The estimated useful lives are:

Capital work-in-progress are carried at cost less any recognised impairment loss and is not depreciated until it is

transferred into one of the asset categories, which occurs when the asset is ready for use.

The statement of comprehensive income reflects the Group's share of the results of operations of the associate or

joint venture. Any change in OCI of those investees is presented as part of the Group's OCI. In addition, when there

has been a change recognised directly in the equity of the associate or joint venture, the Group recognises its share

of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from

transactions between the Group and the associate or joint venture are eliminated to the extent of the interest in the

associate or joint venture.

The aggregate of the Group's share of profit or loss of an associate and a joint venture is shown on the face of the

statement of comprehensive income outside operating profit.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Group.

When necessary, adjustments are made to bring the accounting policies in line with those of the Group.



2.5 INVESTMENT IN ASSOCIATES AND JOINT VENTURES (CONTINUED)

2.6 INVENTORIES

2.7 FINANCIAL ASSETS

2.8 TRADE AND OTHER RECEIVABLES

2.9 CASH AND CASH EQUIVALENTS

• Oil and lubricants : purchase cost on a first-in-first-out basis

• Stores and spares : at weighted average cost

Net realisable value is based on estimated selling price, less any further costs expected to be incurred to

completion and disposal.

The Group classifies its financial assets into loans and receivables. The classification depends on the purpose for

which the financial assets were acquired. Management determines the classification of its financial assets at initial

recognition.

After application of the equity method, the Group determines whether it is necessary to recognise an impairment

loss on its investment in its associate or joint venture. At each reporting date, the Group determines whether there

is objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence, the

Group calculates the amount of impairment as the difference between the recoverable amount of the associate or

joint venture and its carrying value, and then recognises the loss as ‘Share of profit of an associate and a joint

venture’ in the consolidated statement of comprehensive income.

Upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and

recognises any retained investment at its fair value. Any difference between the carrying amount of the associate or

joint venture upon loss of significant influence or joint control and the fair value of the retained investment and

proceeds from disposal is recognised in profit or loss.

Inventories are stated at the lower of cost and net realisable value. Costs are those expenses incurred in bringing

each product to its present location and condition, and are determined as follows:

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted

in an active market, other than: (a) those that the entity intends to sell immediately or in the short term, which are

classified as held for trading, and those that the entity upon initial recognition designates as at fair value through the

statement of comprehensive income; (b) those that the entity upon initial recognition designates as available for

sale; or (c) those for which the holder may not recover substantially all of its initial investment, other than because

of credit deterioration.

Trade and other receivables are stated net of impairment losses. A provision for impairment of trade receivables is

established if there is objective evidence that Group will not be able to collect all amounts due according to the

terms of receivables. Significant financial difficulties of the debtor, probability that debtor will enter bankruptcy or

financial reorganization, and default or delinquency in payments are considered indicators that the trade receivable

is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present

value of estimated future cash flows, discounted at the effective interest rate. The amount of provision is recognised

in the statement of comprehensive income.

For the purpose of statement of cash flows, cash and cash equivalents include cash on hand and at bank with a

maturity of less than three months from the date of placement, net of bank overdrafts, if any.



2.10 IMPAIRMENT

Non-financial assets

2.11 BORROWINGS

2.12 PROVISIONS

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference

between its carrying amount, and the present value of estimated future cash flows discounted at the original

effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial

assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in the statement of comprehensive income.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment

loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in the statement

of the statement of comprehensive income.

The carrying amounts of the Group's non-financial assets other than inventories are reviewed at each reporting date

to determine whether there is any indication of impairment. If any such indications exist, the asset’s recoverable

amount is estimated.

An impairment loss is recognised if the carrying amount of an asset or cash generating unit exceeds its recoverable

amount. The recoverable amount of an asset is the greater of its fair value less costs to sell and value in use. In

assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax

discount rate that reflects current market assessments of the time value of money and the risks specific to the

asset.

Financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is

impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events

have had a negative effect on the estimated future cash flows of that asset.

Impairment losses are recognised in the statement of comprehensive income. Impairment losses recognised in

prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer

exists. An impairment loss is reversed (other than relating to goodwill) if there has been a change in estimates used

to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying

amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation,

if no impairment loss had been recognised.

All loans and borrowings are initially recognised at cost less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using

the effective interest method. Instalments due within one year at amortised cost are shown as a current liability.

Gains and losses are recognised in the statement of comprehensive income when the liabilities are derecognised

as well as through the amortisation process. Interest costs are recognised as an expense when incurred except

those that qualify for capitalisation.

Provisions are recognised by the Group when there is a legal or constructive obligation as a result of a past event,

and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is

material, provisions are determined by discounting the expected future cash flows at a rate that reflects current

market assessments of the time value of money and, where appropriate, the risks specific to the liability. Provisions

are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax

rate that reflects current market assessments of the time value of money and the risks specific to the obligation.

The increase in the provision due to passage of time is recognised as interest expense.



2.13 TRADE CREDITORS AND OTHER PAYABLES

2.14 SHARE CAPITAL

2.15 DIVIDEND DISTRIBUTION

2.16 SEGMENT REPORTING

2.17 REVENUE

2.18 DIRECTORS' REMUNERATION

2.19 END OF SERVICE BENEFITS

2.20 FOREIGN CURRENCY

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are

shown in equity as a deduction, net of tax, from the proceeds.

The Board of directors adopts a prudent dividend policy, which complies with regulatory requirements applicable in

the Sultanate of Oman. Dividends are distributed in accordance with the Parent Company’s Memorandum of

Association and are subject to the approval of shareholders. Dividend distribution to the Parent Company’s

shareholders is recognised as a liability in the Parent Company’s separate financial statements only in the period in

which the dividends are approved by the Parent Company’s shareholders.

An operating segment is a component of an entity that engages in business activities from which it may earn

revenues and incur expenses including revenues and expenses relating to transactions with other components of

the same entity, whose operating results are regularly reviewed by the entity’s chief operating decision maker to

make decisions about resources to be allocated to the segment and assess its performance and for which discrete

financial information is available. The accounting policies of the reportable segments are the same as the Group's

accounting policies described under note 2. Identification of segments and reporting are disclosed in note 17.

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of

returns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risks and

rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated

costs and possible return of goods can be estimated reliably, and there is no continuing management involvement

with the goods. The amount of revenue is not considered to be reliably measurable until all contingencies relating to

the sale have been resolved.

The Directors’ remuneration is governed and calculated as set out in the Commercial Companies Law of 1974 and

the regulations issued by the Capital Market Authority of Oman.

End of service benefits are accrued in accordance with the terms of employment of the Group's employees at the

reporting date, having regard to the requirements of the Oman Labour Law and its amendments. Employee

entitlements to annual leave and leave passage are recognised when they accrue to employees and an accrual is

made for the estimated liability arising as a result of services rendered by employees up to the reporting date.

These accruals are included in current liabilities, while that relating to end of service benefits is disclosed as a non-

current liability.

Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed

to the Group.

Contributions to a defined contribution retirement plan and occupational hazard insurance for Omani employees in

accordance with the Omani Social Insurances Law of 1991, are recognised as an expense in the statement of

comprehensive income as incurred.

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the

transaction date. Foreign exchange gains and losses resulting from the settlement of such transactions and from

the translation at reporting date exchange rates of monetary assets and liabilities denominated in foreign currencies

are recognised in the statement of comprehensive income.



2.21 BORROWING COSTS

2.22 LEASES

2.23 INCOME TAX

Current tax

Deferred tax

2.24 EARNINGS PER SHARE

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially

enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is calculated using the liability method, providing for temporary differences between the carrying

amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary difference when they

reverse, based on the laws that have been enacted or substantially enacted at the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available

against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date

and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes

a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset.

All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and

other costs that an entity incurs in connection with the borrowing of funds.

Finance income comprises interest received or receivable on funds invested. Finance income is recognised in the

statement of comprehensive income using the effective interest rate method.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified

as operating leases. Payments made under operating leases are recognised in the statement of comprehensive

income on a straight line basis over the term of the lease. Lease incentives received are recognised as an integral

part of the total lease expense, over the term of the lease.

Income tax comprises current and deferred tax. Income tax expense is recognised in the statement of

comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is

recognised in equity.

Deferred tax assets and liabilities are offset as there is a legally enforceable right to offset these in Oman.

Basic earnings per share is calculated by dividing profit or loss attributable to ordinary equity holders of the

company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per

share is calculated by adjusting the basic earnings per share for the effects of all dilutive potential ordinary shares.

The Group does not have any potentially dilutive shares at the reporting date.



2.25 CURRENT VERSUS NON-CURRENT CLASSIFICATION

• Expected to be realised or intended to be sold or consumed in the normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realised within twelve months after the reporting period

Or

All other assets are classified as non-current.

A liability is current when:

• It is expected to be settled in the normal operating cycle

• It is held primarily for the purpose of trading

• It is due to be settled within twelve months after the reporting period

Or

The Company classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

3.1 Depreciation

3.2 Allowance for doubtful debts

The preparation of financial statements in conformity with IFRS, requires the use of certain critical accounting

estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting

policies. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates

will, by definition, seldom equal the related actual results.

Estimates and judgements are continually evaluated and are based on historical experience and other factors,

including expectations of future events that are believed to be reasonable under the circumstances. The areas

requiring a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to

the financial statements are set out below.

Depreciation is charged so as to allocate the cost of assets over their estimated useful lives. The calculation of

useful lives is based on Management’s assessment of various factors such as the operating cycles, the

maintenance programs, and normal wear and tear using its best estimates.

An estimate of the collectible amount of trade receivables is made when collection of the full amount is no longer

probable. For individually significant amounts, this estimation is performed on an individual basis. Amounts which

are not individually significant, but which are past due, are assessed collectively and a provision applied according

to the length of time past due, based on historical recovery rates.

At the reporting date, gross trade receivables were RO 64,051,388 (Mar-17 - RO 48,696,441) and the provision for

doubtful debts was RO 2,121,061 (Mar-17 - RO 1,492,120). Any difference between the amounts actually collected

in future periods and the amounts expected will be recognised in the statement of comprehensive income.

The Group presents assets and liabilities in the statement of financial position based on current/non-current

classification. An asset is current when it is:

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve

months after the reporting period

• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting

period


3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)

3.3 Allowance for slow moving and obsolete inventory

3.4 Environmental provision

3.5 Provision for site restoration and abandonment cost

3.6 Provisions for other costs

3.7 Investment in associates

3.8 Joint arrangement

3.9 Taxes

The Group holds 50% of the voting rights of its joint arrangement. The Group has joint control over this

arrangement as under the contractual agreements, unanimous consent is required from all parties to the

agreements for all relevant activities.

The Group’s joint arrangement is structured as a limited liability company and provides the company and the parties

to the agreements with rights to the net assets of the limited company under the arrangements. Therefore, this

arrangement is classified as a joint venture.

Uncertainties exist with respect to the interpretation of tax regulations and the amount and timing of future taxable

income. Given the wide range of business relationships and nature of existing contractual agreements, differences

arising between the actual results and the assumptions made, or future changes to such assumptions, could

necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions,

based on reasonable estimates, for possible consequences of finalisation of tax assessments. The amount of such

provisions is based on various factors, such as experience of previous tax assessments and differing interpretations

of tax regulations by the taxable entity and the responsible tax authority.

Allowance for slow moving and obsolete inventory is based on the Management’s assessment of various factors

such as the usability, product life cycles, and normal wear and tear using its best estimates.

At the reporting date, gross inventory were RO 6,022,941 (Mar-17 - RO 6,077,834) and the provision for slow

moving and obsolete inventory was RO 384,507 (2016 - RO 85,000). Any difference between the amounts actually

reliased in future periods and the amounts expected to be reliased will be recognised in the statement of

comprehensive income.

Environmental provision is made for environmental remediation costs based on environmental contamination

assessments made on delivery and storage sites.

Provision for site restoration and abandonment cost is based on the Management assessment of various factors

such as average cost per filling station for restoration and abandonment, estimated life of filling station and discount

rate to be used for discounting the expected cash flows over the estimated life of the filling stations.

Included in the accrued expenses of the Group are accruals for costs which are currently under discussion with the

relevant ministries, customers and a supplier in the Sultanate of Oman. These accruals are based upon the

amounts due to be paid to the supplier as per the pricing mechanism communicated by the relevant ministry.

Management has assessed the level of influence that the Group has on Muscat Gases Company SAOG and

determined that it has significant influence, because of the board representation and contractual terms even though

the shareholding is below 20%. Accordingly, this investment has been classified as an associate. At each reporting

date, the Group determines whether there is objective evidence that the investment in the associate is impaired. If

there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable

amount (higher of value in use and fair value less costs to sell) of the associate and its carrying value, and then

recognises the loss in the statement of comprehensive income.

OMAN OIL MARKETING COMPANY SAOG

Notes to the unaudited financial statements

(Forming part of the financial statements)

Parent

4) Property, Plant and Equipment

Cost

At 1 January 2017 22,887,634 42,686,113 7,065,888 72,639,635

Additions - - 1,500,657 1,500,657

Transfers - - -

Disposals - (114,115) (114,115)

As at 31 March 2017 22,887,634 42,571,998 8,566,545 74,026,177

At 1 January 2018 24,873,836 47,688,885 3,459,066 76,021,787

Additions - - 2,776,191 2,776,191

Transfers - - - -

Disposals - - -

Available for Sale (910,962) (910,962)

As at 31 March 2018 24,873,836 46,777,923 6,235,257 77,887,016

24,873,836 46,777,923 6,235,257 77,887,016

Depreciation

At 1 January 2017 5,949,825 26,942,410 - 32,892,235

Charge for the period 250,819 805,682 - 1,056,501

Derecognition of Site restoration - -

Disposals - (134,334) - (134,334)

As at 31 March 2017 6,200,644 27,613,758 33,815,162

At 1 January 2018 6,936,900 29,894,615 - 36,831,515


Disposals - - - -


Impairment on available for sale (94,716) (94,716)

As at 31 March 2018 7,210,648 30,096,492 - 37,307,140

(7,132,471) (30,174,669) (37,307,140)

Carrying amount

As at 31 March 2017 16,686,990 14,958,240 8,566,545 40,211,015

As at 31 March 2018 17,663,188 16,681,431 6,235,257 40,579,876

Land and buildingsPlant equipment

and vehicles

Assets under

constructionTotal




Group

4) Property, Plant and Equipment

Cost

At 1 January 2017 22,887,634 42,686,113 7,065,888 72,639,635

Additions - - 1,500,657 1,500,657

Transfers - - -

Disposals - (114,115) (114,115)

As at 31 March 2017 22,887,634 42,571,998 8,566,545 74,026,177

At 1 January 2018 24,873,836 47,690,244 3,459,066 76,023,146

Additions - - 2,793,577 2,793,577

Transfers - - - -

Disposals - - -


As at 31 March 2018 24,873,836 46,779,282 6,252,643 77,905,761

24,873,836 46,779,282 6,252,642 77,905,760

Depreciation

At 1 January 2017 5,949,825 26,942,410 - 32,892,235


Derecognition of Site restoration - -

Disposals - (134,334) - (134,334)

As at 31 March 2017 6,200,644 27,613,758 33,815,162

At 1 January 2018 6,936,900 29,894,711 - 36,831,611


Disposals - - - -


Impairment on available for sale (94,716) (94,716)

As at 31 March 2018 7,210,648 30,096,622 - 37,307,270

(7,132,471) (30,174,669) (37,307,140)

Carrying amount

As at 31 March 2017 16,686,990 14,958,240 8,566,545 40,211,015

As at 31 March 2018 17,663,188 16,682,660 6,252,643 40,598,491

Land and buildingsPlant equipment

and vehicles

Assets under

constructionTotal




5) Investment in Subsidiaries%Holding

31-Mar-18 31-Mar-17

Oman Oil Marketing Company LLC-KSA 100% 799,634 1,032,000

Ahlain International LLC 100% 217,331 -

1,016,965 1,032,000

6) Investment in Joint Venture & Associates

1.1 Joint Venture - Omanoil Matrix Marine Services LLC

Summarised financial information of the Joint Venture at the end of the reporting period is as follows:

Group

31-Mar-18 31-Mar-17 31-Mar-18 31-Mar-17

#REF! RO RO RO RO

Net assets 139,169 139,170 139,169 139,170

Company's share in Net assets of the Joint Venture 69,585 69,585 69,585 69,585

Net carrying value of Investment. 69,585 69,585 69,585 69,585

1.2 Associates- Muscat Gas Company SAOG

The following table illustrates summarised financial information of the Group's investment in the associate:

Group

31-Mar-18 31-Mar-17 31-Mar-18 31-Mar-17

RO RO RO RO

Total assets 10,758,641 10,602,929 10,758,641 10,602,929

Total liabilities (2,031,678) (2,362,732) (2,031,678) (2,362,732)

Net assets 8,726,963 8,240,197 8,726,963 8,240,197

Company's share in Net assets of the Associate 800,873 756,203 800,873 756,203

Company's Carrying Value of Investment 1,539,340 2,446,179 1,539,340 2,446,179

Share of profit from Associate -estimated - 18,463 - 18,463

Impairment on Investment - (760,731) - (760,731)

Carrying value of Investment in Associate 1,539,340 1,703,911 1,539,340 1,703,911

1,539,340 1,703,911 1,539,340 1,703,911

Income 2,272,273 2,328,232 2,272,273 2,328,232

Expense (2,272,273) (2,127,110) (2,272,273) (2,127,110)

Estimated profit of Associate for the period - 201,122 - 201,122

Company's share in profit of the Associate - 18,463 - 18,463

Parent

The Parent has a 9.18% (2016: 9.18%) interest in Muscat Gases Company SAOG (investee), a joint stock company incorporated in the Sultanate of Oman on 13

November 1989 under a trade license issued by the Ministry of Commerce & Industry. The investee is engaged in the manufacturing and selling of industrial and

cooking gases. As at 31 March 2018, the fair value of the Group's and Parent Company’s interest in the investee (listed on the MSM), was RO 1,539,340. The total

amount of impairment recognised so far RO 864,232 due to the decrease in fair market value.

Parent

Parent

i) Oman Oil Marketing Comapny LLC is incorporated in the Kindom of Saudi Arabia on 16 Janauary 2017 under a trade license issued by the Ministry of Commerce

& Industry. The subsidiary is primarily engaged in the marketing and distribution of petroleum products. In the current period, the Parent has recognised share of loss

of RO 28,309 in relation to pre-operating activities.

ii) Ahlain International LLC is incorporated on 19 March 2017 under a trade license issued by the Ministry of Commerce & Industry. The investee is engaged in the

retail convenience stores and related operations in Sultanate of Oman. In the current period, the Parent has recognised share of loss of RO 9,114 (2017: NIL) in respect

of the subsidiary.

Investment in Joint Venture represents the Company’s participation in 50% of the equity interest of Omanoil Matrix Marine Services LLC (“the Joint Venture”), a

Company incorporated in Oman on 28 April 2010. The other shareholder of the Joint Venture is Matrix Marine Holding GmbH, a company incorporated in Germany.

The objective of the Joint Venture is to sell oil and their by products and supply fuel at the Port of Sohar.

During the last year, the joint venture has ceased its operations and currently in the final stage of liquidation proceedings. Management has carried out an assessment

and has concluded that the the joint venture has sufficient assets, the carrying value will be recovered from the liquidation process.




6) Investment in Associate -Continue

1.3 Associates-Lubchem International Industry LLC

Group

31-Mar-18 31-Mar-17 31-Mar-18

RO RO RO

Company's Cost of Investment 395,714 623,736 395,714

Shareholder Loans reclassified 4,239 - 4,239

Share of loss from Associate (12,411) - (12,411)

Carrying value of Investment in Associate 387,542 623,736 387,542

(342,507) (408,264)

Income/(Loss) from the Associate for the period (31,028) - (31,028)

Company's share in loss of the Associate (12,411) - (12,411)

(9,114) -

7) Inventories

31-Mar-18 31-Mar-17 31-Mar-18

RO RO RO

Oil and lubricants 6,015,443 6,070,336 6,036,615

Stores and spares 7,498 7,498 7,498

Less: allowance for slow moving and obsolete inventory (384,507) (85,000) (384,507)

5,638,434 5,992,834 5,659,606

5,638,434 5,992,834

8) Trade and other receivables

31-Mar-18 31-Mar-17 31-Mar-18

RO RO RO

Trade receivables 64,051,388 48,696,441 64,511,052

Less: allowance for impaired debts (2,121,061) (1,492,120) (2,121,061)

61,930,327 47,204,321 62,389,991

Amounts due from related parties (Note-18) 5,499,272 2,898,467 5,193,098

Other receivables 13,860,792 1,050,863 13,860,792

Prepaid expenses 1,603,179 1,541,173 1,603,179

82,893,570 52,694,824 83,047,060

82,893,570 52,694,824

9) Cash and cash equivalents Group

31-Mar-18 31-Mar-17 31-Mar-18

0 RO RO RO

Cash in hand 37,909 34,666 37,909

Cash at bank 18,856,763 38,120,838 20,054,882

18,894,672 38,155,504 20,092,791

18,894,672 38,155,504 20,092,791

Less: Deposits classified under non current assets - - -

Net cash and cash equivalents for the statement of cash flow 18,894,672 38,155,504 20,092,791

Effective 6 May 2014, the Parent Company acquired a 40% shareholding in Lubechem International Industry LLC (Lubechem), a company

engaged in the manufacturing of grease and lubricants, lubricants waste recycling and chemicals blending. Lubechem is registered in the Emirates

of Ras Al-Khaimah as a limited liability company in Ras Al-Khaimah Investment Authority. The Group has recognised an impairment of RO

161,133as at 31-Dec-2017.

Parent

Parent




Group

10) Share capital Number of shares

31-Mar-18 31-Mar-17 31-Mar-18

3,225,000 Multi-vote shares of RO 0.1 each 3,225,000 3,225,000 3,225,000

61,275,000 Ordinary shares of RO 0.1 each 61,275,000 61,275,000 61,275,000

64,500,000 64,500,000 64,500,000

Oman Oil Company SAOC – Multi-vote shares 3,225,000 3,225,000 3,225,000

– Ordinary shares 28,380,000 28,380,000 28,380,000

Civil Services Pension Fund – Ordinary shares 8,352,027 8,352,027 8,352,027

39,957,027 39,957,027 39,957,027

11) Legal reserve

12) Employees’ end of service benefits

Group

Movement in the liability is as follows: 31-Mar-18 31-Mar-17 31-Mar-18

RO RO RO

Balance at 1 January-2018 344,455 358,042 345,806

Accrued during the period - - 443

End of service benefits paid - (30,807) (421)

Balance as at March-2018 344,455 327,235 345,828

344,455 327,235

Parent

Number of shares

Share of the company who own 10% or more of the company's shares, whether in their name or through a nominee account, are as follows;

As required by the Commercial Companies Law of the Sultanate of Oman, 10% of the profit of each year is transferred to a legal reserve

until the reserve reaches a minimum one-third of the issued share capital. The Company has resolved to discontinue any further transfers to

this reserve, as the reserve equals one-third of the issued share capital. This reserve is not available for distribution.

Parent




13) Trade and other payables Group

31-Mar-18 31-Mar-17 31-Mar-18

RO RO RO

Trade payables 10,363,935 2,074,563 10,738,556

Due to related parties (Note-18) 39,304,984 38,243,814 39,304,984

Accrued expenses & others 8,617,159 10,467,644 8,615,596

Directors’ remuneration provision 44,100 44,100 44,100

58,330,178 50,830,121 58,703,236

58,330,178 50,830,121

14) Bank borrowings

31-Mar-18 31-Mar-17 31-Mar-18

RO RO RO

Short Term loan 20,000,000 20,000,000 20,000,000

Term loan - - -

Term loan I 3,614,064 5,348,814 3,614,064

23,614,064 25,348,814 23,614,064

(23,614,064) (25,348,814) (23,614,064)

Current portion

Short Term loan 20,000,000 20,000,000 20,000,000

Term loan I - - -

Term loan I 1,734,750 2,615,893 1,734,750

21,734,750 22,615,893 21,734,750

21,734,750 22,615,893 21,734,750

Non-current portion

Term loan I - - -

Term loan 1,879,314 2,732,921 1,879,314

1,879,314 2,732,921 1,879,314

1,879,314 2,732,921

Short term Loans -

Long term Loans -

Parent

The Short term loan is repayable within one year of the balance sheet date. The loan is unsecured and

carried interest at current market rates.

The long term loan is unsecured and carries interest at commercial rates.




15) Income tax Group

31-Mar-18 31-Mar-17 31-Mar-18

RO RO RO

Current liability:

Current period 328,788 337,770 356,314

Prior years 77,722 62,896 50,196

406,510 400,666 406,510

406,510 400,666 406,510

Comprehensive Income Statement -

Current period 328,788 328,971 328,788

Deferred tax relating to origination and reversal of

temporary difference- - -

328,788 328,971 328,788

(328,788) (328,971) (328,788)

Deferred tax asset:

At 1 January 505,451 306,138 505,451

Balance as at Sep 505,451 306,138 505,451

505,451 306,138 505,451

The deferred tax asset comprises the following differences

Provision and other charges 432,535 303,312 432,535

Property and other equipment 72,916 2,826 72,916

505,451 306,138 505,451

505,451 306,138

16) Environmental provision

Group

Movement in the provision is as follows: 31-Mar-18 31-Mar-17 31-Mar-18

RO RO RO

Balance at 1 January-2018 300,245 300,245 300,245

Utilized during the period - - -

Balance as at March-2018 300,245 300,245 300,245

300,245 300,245

17) Net finance income Group

31-Mar-18 31-Mar-17 31-Mar-18

RO RO RO

Interest income 176,370 194,453 176,370

Interest expenses (105,863) (135,476) (105,863)

70,507 58,977 70,507

70,507 58,977

Parent

The Company is subject to income tax in accordance with the income tax law of the Sultanate of

Oman at the enacted tax rate of 15% (2016 : 12%)

Parent

The Company provides for environmental remediation costs based on environmental contamination

assessments made on its delivery and storage sites

Parent




18) Related party transactions

Group

31-Mar-18 31-Mar-17 31-Mar-18

Balance as at 31-March

Fuel sales to filling stations owned by directors 1,724,411 1,980,927 1,724,411

Fuel sales to commercial customers related to directors 4,430,751 2,607,876 4,430,751

Fuel sales to Joint Venture - - -

Costs

Fuel Purchases from related parties 140,718,584 108,104,848 140,718,584

Brand royalty 129,642 105,305 129,642

Remuneration to directors - Provision 44,100 44,100 44,100

Directors’ sitting fees 12,400 6,400 12,400

Net interest paid to related parties 0 - - -

Balances

Bank balances 1,123,528 1,936,568 1,123,528

Due from related parties (Note 8) 5,499,272 2,898,467 5,193,098

Due to related parties (Note 13) 39,304,984 38,243,814 39,304,984

19) Staff cost

Group

31-Mar-18 31-Mar-17 31-Mar-18

RO RO RO

Wages, salaries and allowances 1,727,034 1,551,051 1,754,426

End of service benefits - - -

Social security costs 84,149 85,198 84,149

End Of Service - - -

Other employee benefits 83,843 108,220 83,843

1,895,026 1,744,469 1,922,418

1,895,026 1,744,469

Related parties comprise the shareholders, directors and business entities in which they have the ability to

control or exercise significant influence in financial and operating decisions.

The Company has entered into transactions with entities over which certain Directors are able to exercise

significant influence. In the normal course of business, the Company provides services on commercial

terms to related parties and avails services from related parties. The Directors believe that the terms of

providing and receiving such services are comparable with those that could be obtained from third parties.

The volumes of significant related party transactions during the year and with parties with a shareholding of 10% or

more in the Company and / or related to Directors, were as follows:

Parent

Parent




20) Operating & other expenses

The operating and other expenses of the company include the following items:

Group

31-Mar-18 31-Mar-17 31-Mar-18

RO RO

Operating leases 959,398 1,088,020 959,398

Ministry of Commerce & Industry license fee 544,788 475,554 544,788

Brand Royalty payable to Parent company 129,642 105,305 129,642

Director's remuneration provision 44,100 44,100 44,100

Board sitting fee 12,400 6,400 12,400

Audit and professional fee provision 2,550 2,250 2,550

Provision for doubtful debts 126,977 730,652 126,977

21) Corresponding figures

Parent

The corresponding figures included for comparative purposes have been reclassified to conform to the

presentation in the current period. There were no group number in first quarter of 2017 to report.

OMAN OIL MARKETING COMPANY SAOG NOTES …...OMAN OIL MARKETING COMPANY SAOG NOTES TO THE FINANCIAL...

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